via The Huffington Post
I received an e-mail the other day from a friend of mine. His question was "What is deleveraging, and why should I care?"

My friends, we are going into uncharted territory here. The definition of deleverage is "The reduction of financial instruments or borrowed capital previously used to increase the potential return of an investment. It is the opposite of leverage. Increasing leverage increases a firm's risk, therefore, deleveraging attempts to lower risk. When a firm deleverages its balance sheet, that's a sign of slowing growth.

Take a look at the graph, to quote David Paul "Over the past quarter century--dating to the dawn of the Reagan Revolution in fact--America has become awash in debt, and sub-prime home mortgages are just the tip of the iceberg. Home mortgages. Credit cards. Auto loans. Business loans. Federal debt. As shown below, since 1980, our public debt has grown ten-fold, from $4.4 trillion to over $45 trillion."

To make things simple we have been borrowing money that has not even existed. We have relied on foreigners for most of our private and public projects. Don't even get me started on how our policy of printing money has taken us. Do you think that the world is going to continue to lend us money with the way that we have dis-credited ourselves? I know I wouldn't..

The plain and simple question we need to all ask ourselves.. Are we ready? This has been a long time in the making, and it is going to be a violent correction.

I was talking to a very successful economist the other day from a private firm. He told me that by his firms calculations that 25% of the homes in America are worth NOTHING. That's right zero. How could this be? Real Estate is always worth something.

The fact is, is that there has been so much leveraging of money that the money that was used to finance you home didn't even really exist. It was borrowed, and borrowed, and borrowed again. Guess who is going to suffer. We are witnessing the largest transfer of wealth that the world has ever seen.

Guess who is going to come in and buy the Real Estate for pennies on the dollar..